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Why Are Gas Price Going Up and Down?


Gas Prices Sky Rocket Causing Chaos

Despite the gas price is dropping or increasing, most countries still need to pay for high gas prices. The price of gas is no-doubt crippling everyone’s bank accounts, and it sounds like it might get worse.

The ever-increasing cost of gasoline is having an effect that is difficult to ignore. The very lifestyles of people around the world are changing because of it. The governments at national and local levels are all making adjustments to help with the blow of these increasing costs.

County and city officials have decided to go to four days, ten-hour work weeks to help offset the ever-increasing cost of gasoline. This change was made in an attempt to help the employees save one day from driving and to cut down on the amount of time that county and city vehicles are on the road.

Garbage collection has gone from twice a week to once a week with the assignments of larger garbage cans to residents to make this possible. The post office is even contemplating going to a five day work week. For years we have depended on six-day mail delivery and now there is a chance that it is no longer going to be the case.

Some areas are taking police out of their patrol cars and putting on foot. This not only increases the visibility but cuts down on the amount of gasoline used for them to patrol downtown areas.

The reasons for these proposed and already incorporated changes? The fact that halfway through the finical year these organizations are already over the budget allotted them for gasoline. These aren’t the only areas that have been affected. School children are being affected as well. Field trips that were once a part of the normal school routine are now being looked at as an extravagance. The chance of them being cut out is a real possibility.

Simple Demand and Supply

The current drop in oil price is due to the OPEC didn’t cut down their supply. As the market is now having a little oversupply of oil, this caused the oil price to drop to a low level. OPEC is consists of 12 members, which are inclusive of Angola, Algeria, Kuwait, Iran, Iraq, Nigeria, Ecuador, Libya, Saudi Arabia, Qatar, United Arab Emirates, and Venezuela.

demand supply

However, once The OPEC that supply most of the oil consumption in the world start to reduce their oil production, the price will rise again. And if the organization remains the production at a low level for some time and result in a shortage of world supply of oil, high demand will make the gas price going up again.

Selfish Politician

Unfortunately, Big Oil is too powerful and has too many politicians in its pockets for things to change. Big Oil doesn’t want efficient cars–best case in point: in the early 90s, Mitsubishi brought to their Cypress, California headquarters for testing an electric car that was self-recharging for testing. Within 24 hours it was destroyed by a firebomb.

The Effects

When the gas price is high, many people are forced to live with their parents until they saved enough money to buy a house closer to work because average people are spending approximately $400 a month just at the pump. That is just a little less than what most people pay for their monthly mortgage! And it would come out to equal $4800 a year– just to be able to drive.

Moving isn’t the only thing most people do to accommodate the rising cost of gasoline. Some people used to go out to dinner or buy take-out once or twice a week. But they are forced to cut it down to one time or not at all within a couple of weeks. Some are cut their grocery list down to the bare minimum by simply stick to the basics: milk, bread, meat and cheese, juices, cereal, fresh fruits, and vegetables, etc.

Some people haven’t bought any new clothes for almost a year (except maybe socks or underwear–again, the basics). A night out together is very rare; only when they have managed to rack up some overtime from work or when it’s income tax return time (or when it doesn’t involve spending money).

Gas Prices Affecting Everything: Even Social Networking Sites?

Previously, there was an interesting thing been on the rise of social media. Facebook groups that supposedly have solutions to rising gas prices have started to pop up all over the place.

Back then, when you type in “Gas Prices” into the “Search” box on Facebook and over 500 results show up with many stating things such as “Amazing New Way to Lower Gas Prices” or “Help Make Gas Prices Go Down”. Now, what are these so-called solutions? Let’s take a closer look. Many of the solutions are to stop purchasing gas for one day and the prices will go down.

One of my favorite solutions was to just get a mountain bike with spinners and a sound system. Another popular solution is not to purchase gas from Exxon or Mobil in hopes that the companies with a plummet in profits and they will lower the prices. Interestingly enough another group states that the best idea is to not purchase from Shell. Another group states to not buy from Citco.

So let me get this straight. No one should buy any gas from any gas company and our problems would be solved. Okay, that might be an overstatement, and is it going to work? How do you think?

Why We Need Higher Gas Prices?

Everybody seems to hate high gas prices. Every time gas goes up a few cents more, it makes the local news. People seem angry over it all because they feel that the oil companies are gouging them and becoming financially obese from the high prices.

The notion that many seem to share is that we need cheaper gas so that we can continue to drive and live as we normally do without the financial pressure of high fuel prices. What’s wrong with that? I suppose nothing is wrong with that, but there are a lot of ways to look at it. Perhaps my angle is unique, but I believe it’s the truth.

We’ve all taken notice of the recent clamor over global climate change. “Global warming” is going to lead to our downfall, or so we’re lead to believe.

I do agree that global warming is occurring and that we should reduce emissions to counter it, although I also believe that our record of climate change seems a bit short term and so it makes it all a little bit sketchy.

My attitude is “better safe than sorry.” But aside from climate change, burning fossil fuels like gasoline also put something into the air that we see a lot sooner than global warming: smog.

Particulates, in-vehicle exhaust, in particular, have ruined our air. Our major cities have become surrounded by layers of the stuff. Not only is it an eyesore, but it contributes to the breathing ailments of millions of people.

oil rig
oil rig

So how do gas prices relate to climate change and smog? I believe that gas prices rising in the long term will spur people to drive less and buy more fuel-efficient vehicles. We’ve already seen some of this occurring in the past few years. As gas prices have risen, the sales of more fuel-efficient cars have also risen, most of the time.

In general, compared with 2000 and 2001, the sales of SUVs have fallen back noticeably, although American automakers have continued pushing them. Compact and midsize cars now seem to be gaining some popularity again. To be fair though, these trends have fluctuated as gas prices have fluctuated.

At some points, the argument on rising gas prices may be too hypothetical. I don’t necessarily disagree except the people are not the strongest force – or if they are, they don’t know it. Everyone is mad about it when the gas price is going up, but no one knows what to do. It’s impossible to get the whole country to ride bikes or buy fuel-efficient cars. I do not believe there is a scarce of oil.

I believe that is just simply told to us. The only way that Americans will put their heads together is if fuel runs out. Higher gas prices lead people not to be able to go to jobs. Many areas of the US are spread out and people must drive to their jobs and make minimum wage.

When gas prices are higher, these people will have no job and it will not be for a short period. I do believe the oil companies are gouging. Why? They raised prices in Florida and Louisiana during the hurricanes and profited billions. Their profit alone could probably pay for half our deficit.

If you are taking a bike ride to San Francisco and notice the gasoline selling for more than $6/gallon. Will you feel excited since you are not driving a car? And will you think this is going to encourage more people to sell their cars and riding bikes? Well, probably not. Why? This is simply because habits die hard. Once people are getting used to something, it is not easy for them to change. Thus, you will see there will be more and more cars cramping the road and more fuel is going to consume.

Alternative Sources of Energy

High gas prices have prompted people to seek other sources of energy, and that’s a good thing, but we’ve suffered tremendously as a result. I think that the only good thing about high gas prices is that our country will be forced to explore its natural resources. If there is such a thing as global warming, it’s most likely caused by sunspots.

From the news released from many automobile manufacturers, many car dealerships are anxiously waiting for the arrival of the new hybrid cars and hope that the hybrids can help to reduce the demand for gasoline to power cars. More hybrids mean less gas consumption, which would eventually drive gas prices back down. However, the gas prices will have to get much higher before the consumer makes changes in their buying practices.

Final Thought

I would counter that argument by saying that without high gas prices, the people wouldn’t be demanding change in the first place and that “research & development unhindered by big government and big business to at least cut emissions in half” would not occur with enough energy to be fruitful unless it was so desperately demanded… because of high gas prices.

The people are indeed the strongest forces, they just need to get mad enough to make a change. High gas prices might cause some suffering, but people will only stand for it for a short time before demanding and making change.

Remember, High gas prices will affect everything, the food we eat, the lumber we need to build with, so does it make sense to applaud a stranglehold on our basic lifestyles? OR, can we better use research & development unhindered by big government and big business to at least cut emissions in half?

Remember everybody will benefit from high gas prices except the US – the people. Consider $5 or $6 or more a gallon, and $3 to buy an apple…or $200 to fill your smart cars, is that what we want..? Or should we use our heads?

Warren Paine

Warren is the senior mortgage loan officer who has worked in mortgages and loan industry since 1995. He study in Harvard and major in Finance with a Bsc. Honor Degree. He possesses a Paralegal Certificate as well.

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